China Drought Headline News

Published on: 08:50AM Feb 14, 2011

While the Egyptian riots remain in the news this week (see 2/3/11 wire), China’s drought is dominating the headlines. 
MGEX explored food energy related item end stocks, imports of U.S. wheat and the present China drought.
China holds the majority of end stocks of wheat, corn and rice versus the world. For the 2010-2011 market year China holds 33.8% of the world wheat end stocks, 49% of the corn and 46% of the rice. Also interesting is China, over several marketing years, is increasing its share of wheat, corn and rice end stocks.
 China es vs world
Recently there has been discussion of China potentially importing wheat from the U.S. The import economics show that by the time the wheat is imported to Chinese domestic end users it is a wash versus China domestic prices.
China had a drought in its prime wheat growing region in 2006, the same year China ultimately produced a record wheat crop. Moisture in the form of snow has managed to work its way into the prime wheat producing region, but MGEX wants to make you aware of three facts:
  • Pre seeding farming practices for China carries less risk than most other major players of wheat
  • 66% of China’s wheat is irrigated
  • March and April will help dictate 2011 winter and spring wheat production
MGEX welcomes your questions.........Joe Victor
 Information used to compile this update is from publicly available sources. Nothing contained herein should be construed as a trading recommendation of MGEX, its employee or its members. For informational purposes only.